INTERIM BUDGET 2024
Interim Budget 2024-25:
The Finance Minister of India unveiled the interim budget for the fiscal year 2024 on February 1.
Termed as an interim budget, it is released by the current government due to the upcoming mid-2024 general elections.
The full-fledged financial budget is slated to be presented after the conclusion of the general elections.
Difference between Union Budget and Interim Budget:
Union Budget
The yearly budget encompasses every facet of government finances, encompassing revenue generation, allocation of expenditures, and the declaration of policies.
A yearly budget, unveiled on February 1st annually, delineates the government’s financial plan for the entire fiscal year spanning from April 1 to March 31.
The yearly budget undergoes intense parliamentary discussions and scrutiny.
Crucial policy determinations such as alterations in tax framework and import duty structure are disclosed in the yearly budget.
Interim Budget
The interim budget primarily centers on sustaining necessary expenditures for ongoing schemes and vital public services until the new government assumes responsibility.
An interim budget, commonly referred to as a ‘Vote on Account’ is presented during an election year. Its primary purpose is to secure funding for essential government operations until the newly elected government introduces its comprehensive budget.
The interim budget undergoes less scrutiny owing to its restricted scope and provisional nature.
The interim budget avoids introducing significant policy declarations or making substantial changes to tax structures due to its provisional character.
Understanding the Interim Budget: Its Purpose and Timeline (2024):
➢ What Constitutes an Interim Budget: The interim budget functions as a short-term financial plan to sustain central government spending until elections are conducted and a new central government assumes power.
It outlines anticipated expenditures and receipts until the formation of the new government.
The Election Commission’s Code of Conduct prohibits the inclusion of major schemes in the interim budget to prevent influencing voters.
Additionally, the government cannot present the Economic Survey alongside the interim budget.
➢ Purpose of the Interim Budget: The primary objective is to ensure the continuity of essential government functions until the new administration takes office.
➢ Interim Budget 2024 Timeline: The effectiveness of the interim budget is limited to March 31, 2024, restricting the spending power of the current government beyond that date.
➢ Votes on Account Provision : Due to the absence of a constitutional provision for an interim budget, the government utilizes the ‘vote on account’ provision to secure funds for the interim period.
Reason behind labelling the Interim Budget as a “Vote on Account”:
An interim Budget is commonly referred to as a ‘vote-on-account’ since it functions as an authorization to incur specific expenditures essential until a new government assumes power.
Typically, a vote-on-account is valid for two months and can be extended if necessary.
The constitutional foundation for this lies in Article 116 of the Constitution, wherein it provides for an upfront allocation of the budget from the Consolidated Fund of India to the current government.
About Union Budget :
Constitutional Mandate: As per Article 112 of the Indian Constitution, the Union Budget, synonymous with the annual financial statement, outlines the government’s anticipated receipts and expenditures for the upcoming fiscal year.
Interestingly, the term ‘Budget’ is not explicitly mentioned in the constitution.
Union Budget Period: The Union Budget period spans from April 1 to March 31, aligning with the financial year.
Preparation Authority: The Department of Economic Affairs, within the Ministry of Finance, is the central body responsible for crafting the Budget.
Union Budget Classification:
The Union Budget is categorized into two main components: Revenue Budget and Capital Budget.
Revenue Budget: Encompassing the government’s revenue receipts and expenditures, it involves two types of revenue receipts – tax and non-tax revenue.
Revenue expenditure covers day-to-day government operations and various services provided to citizens.
A deficit occurs if revenue expenditure surpasses revenue receipts, leading to a revenue deficit.
Capital Budget : This budget section includes capital receipts and capital expenditures.
Capital receipts primarily involve loans from the public, foreign governments, and the Reserve Bank of India (RBI).
Capital expenditure pertains to investments in machinery, equipment, buildings, health facilities, education, and other development areas.
Fiscal Deficit: Fiscal deficit arises when the government’s total expenditure exceeds its total revenue.
Interim Budget 2024 Highlights: People-Centric Inclusive Development:
➢ Viksit Bharat by 2047: The government is dedicated to transforming India into Viksit Bharat by 2047, emphasising inclusive development with the motto of ‘sabka sath, sabka vikas’.
➢ Inclusive Development and Growth: The government has actively promoted inclusivity in all aspects, departing from the earlier approach of ‘Provisioning Up-to-Village Level’in the last decade.
➢ Social Justice: The focus on four societal aspects is encapsulated by ‘GYAN’ –Garib (Poor), Yuva (Youth), Annadata (Farmer), and Nari (Women).
➢ Garib Kalyan, Desh ka Kalyan (Garib):
Poverty Alleviation: Over the last 10 years, 25 crore people have been lifted out of multidimensional poverty.
The utilisation of PM-Jan Dhan accounts resulted in a Direct Benefit Transfer (DBT) of Rs. 34 lakh crore, leading to government savings of Rs. 2.7 lakh crore.
PM-SVANidhi: This initiative provided credit assistance to 78 lakh street vendors, with 2.3 lakh receiving credit for the third time.
PM-JANMAN Yojana: Geared towards the development of particularly vulnerable tribal groups (PVTG).
PM-Vishwakarma Yojana: Offers end-to-end support to artisans and craftspeople engaged in 18 trades.
➢ Welfare of Annadata (Farmers):
PM-KISAN SAMMAN Yojana: Extended financial assistance to 11.8 crore farmers.
PM Fasal Bima Yojana: Provides crop insurance to 4 crore farmers.
Electronic National Agriculture Market (e-NAM): Integration of 1361 mandis, benefiting 1.8 crore farmers with a trading volume of Rs. 3 lakh crore.
➢ Momentum for Nari Shakti (Nari):
Mudra Yojana: Empowered women entrepreneurs with 30 crore Mudra Yojana loans.
Female Enrolment in Higher Education: Achieved a 28% increase in female enrolment in higher education over the past decade.
PM Awas Yojana: Over 70% of houses under PM Awas Yojana are allocated to women from rural areas.
Self-Help Groups (SHG): Assisted 1 crore women through 83 lakh SHGs, enabling them to become ‘Lakhpati Didis’
➢ Yuva (Youth):
Skill India Mission: Trained 1.4 crore youth under the Skill India Mission.
Fostering Entrepreneurial Aspirations: Facilitated 43 crore loans under PM Mudra Yojana to support the entrepreneurial aspirations of the youth.
Strategy for Amrit Kaal :
➢ Sustainable Development:
Commitment to ‘Net Zero’ by 2070: Viability gap funding allocated for wind energy projects.
Establishment of coal gasification and liquefaction capacity.
Phased mandatory blending of CNG, PNG, and compressed biogas.
Financial assistance provided for the procurement of biomass aggregation machinery.
➢ Rooftop Solarization:
Aim to provide 300 units of free electricity every month through rooftop solarization to 1 crore households.
Estimated annual savings for each household range from Rs.15,000 to Rs.18,000.
➢ e-Mobility:
Adoption of e-buses for public transport networks.
Strengthening the e-vehicle ecosystem by supporting manufacturing and charging infrastructure.
➢ Environmentally Friendly Alternatives:
Introduction of a new scheme for biomanufacturing and bio-foundry to support eco-friendly alternatives.
➢ Other Measures: Over 10 crore LPG connections released under PM Ujjwala Yojana.
Distribution of 36.9 crore LED bulbs, 72.2 lakh LED tube lights, and 23.6 lakh energy-efficient fans under UJALA.
Installation of 1.3 crore LED street lights under the Street Lighting National Programme.
Infrastructure and Investment
➢ Substantive Development of Infrastructure: Comprehensive development in physical, digital, and social infrastructure.
Increased outlay for infrastructure to Rs. 11.11 lakh crores in FY25.
Digital Public Infrastructure (DPI): Promotion of DPI for formalisation and financial inclusion.
Urban Transformation: Promotion of urban transformation through Metro rail and NaMo Bharat initiatives.
➢ Railways:
Implementation of three major economic railway corridor programs under PM Gati Shakti for improved logistics efficiency:
Energy, mineral, and cement corridors.
Port connectivity corridors.
High traffic density corridors.
Conversion of 40,000 normal rail bogies to Vande Bharat standards.
➢ Aviation Sector:
Doubling the number of airports to 149.
Introduction of 517 new routes carrying 1.3 crore passengers.
Indian carriers placed orders for over 1000 new aircraft.
Expansion of existing airports and comprehensive development of new airports under the UDAN scheme.
➢ Investments:
FDI inflow during 2014-23 totalling USD 596 billion, twice the inflow during 2005-14.
Promotion of foreign investment through negotiation of bilateral investment treaties.
Inclusive Development - Health:
Encouraging Cervical Cancer Vaccination: Advocating for cervical cancer vaccination among girls aged 9-14.
Enhanced Nutrition and Early Childhood Care: Accelerating Saksham Anganwadi and Poshan 2.0 initiatives to enhance nutrition delivery and early childhood care and development.
U-WIN Platform for Immunization: Introducing the U-WIN platform to streamline immunisation efforts as part of the Mission Indradhanush initiative.
Extension of Health Cover: Expanding health coverage under the Ayushman Bharat scheme to include all ASHA workers, Anganwadi workers, and helpers.
Housing:
PM Awas Yojana (Grameen): Pradhan Mantri Awas Yojana (Grameen) is on the verge of accomplishing the target of 3 crore houses, with an additional 2 crore targeted for the next 5 years.
Housing for Middle-Class Scheme: Launching a scheme dedicated to housing for the middle class, aimed at encouraging them to purchase or build their own houses.
Tourism:
Comprehensive Development of Tourist Centres: States will be encouraged to comprehensively develop iconic tourist centres, emphasising their branding and marketing on a global scale.
Rating Framework for Tourist Centres: The establishment of a framework for rating tourist centres based on the quality of facilities and services is proposed.
Long-term Interest-Free Loans: States will receive long-term interest-free loans for financing the development of tourist centres, operating on a matching basis.
Global Diversity Showcase at G20 Meetings: The hosting of G20 meetings in 60 different places showcased the diversity of India to a global audience.
Projects for Islands: Projects for port connectivity, tourism infrastructure, and amenities will be initiated on islands, including Lakshadweep.
Agriculture and Food Processing:
Pradhan Mantri Kisan Sampada Yojana: The scheme has benefited 38 lakh farmers, generating employment for 10 lakh individuals.
Micro Food Processing Enterprises Yojana: The Pradhan Mantri Formalisation of Micro Food Processing Enterprises Yojana has assisted 2.4 lakh Self-Help Groups (SHGs) and 60,000 individuals with credit linkages.
Promotion of Post-Harvest Investment: The government aims to promote private and public investment in post-harvest activities.
Expansion of Nano-DAP Fertilizer Application: The application of Nano-DAP (Di-ammonium Phosphate) fertiliser will be expanded to cover all agro-climatic zones.
Atmanirbhar Oilseeds Abhiyaan: A strategy will be formulated under the Atmanirbhar Oilseeds Abhiyaan to achieve self-reliance (atma nirbharta) in oilseeds.
Comprehensive Dairy Development Programme: A comprehensive program for dairy development will be formulated, targeting overall growth in the dairy sector.
Direct Taxes:
➢ Tax Collection and Return Filings Growth: Over the last decade, direct tax collections have more than tripled, with a 2.4 times increase in return filers.
➢ Tax Rationalisation Efforts: No tax liability for income up to Rs 7 lakh, increased from Rs 2.2 lakh in FY 2013-14.
Presumptive taxation threshold for retail businesses raised to Rs 3 crore from Rs 2 crore.
Presumptive taxation threshold for professionals raised to Rs 75 lakh from Rs 50 lakh.
Corporate income tax was reduced to 22% from 30% for existing domestic companies.
Corporate income tax rate set at 15% for new manufacturing companies.
➢ Achievements in Taxpayer Services:
Average processing time for tax returns reduced to 10 days from 93 days in 2013-14.
Introduction of Faceless Assessment and Appeal for enhanced efficiency.
Implementation of updated income tax returns, new Form 26AS, and pre-filled tax returns for simplified filing.
Customs Reforms: Reduction in import release time at Customs-
47% to 71 hours at Inland Container Depots.
28% to 44 hours at Air Cargo complexes.
27% to 85 hours at Sea Ports.
Indirect Taxes:
➢ Retention of Tax Rates: The Finance Minister proposes to maintain the same tax
rates for indirect taxes and import duties in the Interim Budget.
➢ Impact of GST Implementation: GST unified the highly fragmented indirect tax regime in India.
Monthly Gross GST Collection: The average monthly gross GST collection doubled to Rs 1.66 lakh crore this year.
Expansion of GST Tax Base: The GST tax base has doubled, indicating a broadening tax structure.
State SGST Revenue Buoyancy: State SGST revenue buoyancy, including compensation released to states, increased to 1.22 in the post-GST period (2017-18 to 2022-23) from 0.72 in the pre-GST period (2012-13 to 2015-16).
Positive Perception Among Industry Leaders: 94% of industry leaders view the transition to GST as largely positive.
Supply Chain Optimization: GST implementation led to supply chain optimization, enhancing overall efficiency.
Reduced Compliance Burden: GST significantly reduced the compliance burden on trade and industry.
Lower Logistics Costs and Taxes: Lower logistics costs and taxes contributed to reduced prices of goods and services, benefiting consumers.
In summary, the interim budget, characterized by its temporary nature, steers clear of major policy announcements or significant modifications to tax structures.
